Company Formation in Dubai - An Overview
The United Arab Emirates (UAE) is a federation made up of Abu Dhabi, Dubai, Sharjah,
Ajman, Fujairah, umm al-Quwain, and Ras al Khaimah that was created in December
1971.
Dubai is one of the major cities in the Middle East, with several prospects for
foreign investors to establish various types of businesses. This city has increased
its opportunities to guarantee that it continues to grow. Aside from that, the
Middle East is one of the world's top oil exporters. There is no tax imposed on
people and individuals in Dubai, either directly or indirectly. As a result of all
of these possibilities, more people are interested in going through the business
registration procedure.
There is a dedicated space in Dubai where different types of registration operations
linked to compliance may be carried out. The Dubai International Financial Centre is
the name given to this location (DIFC). Different types of financial hubs exist not
just in Dubai, but across the Middle East, allowing for the convenience of carrying
out various businesses in Dubai.
When it comes to foreign ownership of a corporation in the DIFC, there are no
restrictions. As a result, the directors and shareholders of a Dubai-registered
company might own the whole firm.
Indirect taxes, such as VAT, are present in Dubai when it comes to taxation. This is
a 5% value added tax on all goods and services delivered in Dubai. Employees working
in Dubai are not subject to any sort of individual income tax. As a result, all of
these benefits would be a compelling reason for an investor to register a company in
Dubai.
Dubai Regulatory Authority for Company Registration
The Registrar of Companies is Dubai's primary regulatory body for business creation.
This registrar would serve as a centralised authority for completing various types
of company compliance and registration. In most cases, a business registration
application in Dubai is submitted to the Registrar of Companies.
Areas Concerning Dubai Company Registration
In Dubai, you have the option of registering your business in one of the following
areas:
Inside DIFC
DIFC is a viable option for a company formation for an investor. There are several
advantages to choosing this location, which include more than simply the simplicity
of forming a business or complying with regulations. When it comes to foreign
ownership of a corporation in the DIFC, there are no restrictions. As a result, the
directors and shareholders of a Dubai-based corporation might be entirely
foreign-owned.
Outside of the DIFC
This is the territory or jurisdiction that is not part of the DIFC. Outside of the
DIFC, a corporation can be formed. According to the Federal Commercial Companies Law
No. 2 of 2015 (Companies Law), companies that are not subject to the DIFC's
jurisdiction must adhere to the foreign investment rules.
The citizenship factor would be used to categorise the ownership component of the
organisation. The UAE national must own 51% of the company. Any entity owned by a
UAE national would be included in this category. In 2018, these prohibitions on
foreign investment were lifted in a number of areas.
The Advantages of a Dubai Company Registration
The following are the advantages of forming a corporation in Dubai:
Provided Regulatory Environment
Dubai's courts adhere to the common law system. However, precedents from court cases
are handled in Dubai by attorneys with US and UK legal degrees. Dubai has a
one-of-a-kind regulatory system.
Foreign ownership is permitted in its entirety.
A corporation incorporated in the Dubai DIFC is permitted to have 100 percent foreign
ownership. As a result, a foreign investor or shareholder might possess 100 percent
of the firm.
Compliance Ease
When compared to other types of jurisdictions, Dubai has lower compliance.
Reduced Tax Burden
When compared to indirect tax, the amount of direct tax collected on a person would
be smaller. In Dubai, indirect taxes such as VAT exist. This would be regarded a
value added tax, which is levied at a rate of 5% on the quantity of products and
services offered in Dubai. Employees working in Dubai are not subject to any sort of
individual income tax.
Types of Business Structures Used in Dubai
For business registration in Dubai, the following structures would be used.
A corporation whose capital is restricted by shares
This type of corporation is sometimes referred to as a private limited company, and
it is restricted by a set number of shares.
Limited Liability Corporation (LLC)
These corporations' liability is often restricted to the number of shares issued.
Regional Office
Typically, this type of organisation is founded outside of Dubai. However, an office
has been established in Dubai to continue out activities.
Limited Liability Partnership
The limited liability partnership, sometimes known as an LLP, is a partnership entity
governed by many partners. The partners' liabilities are restricted.
Foreign Limited Liability Partnership (FLLP)
This sort of partnership business is often a foreign-owned firm managed by
shareholders who are primarily foreign residents.
Eligibility Criteria for Dubai Company Registration
For business registration in Dubai, the following qualifying conditions must be
met:
Requirement for Licensing
A firm is created with the primary goal of carrying out some activity. For a
corporation registered in Dubai, there are three types of licences available. The
following are the licences:
- Commercial licences that cover all types of trade activities.
- Professions, services, craftspeople, and artisans are all covered by
professional licences.
- Industrial licences are required for the establishment of an industrial or
manufacturing facility.
Execution of Free Zone Business
In most cases, a local sponsor is necessary for business registration in Dubai.
Finding a local sponsor is a crucial need for a person. As the local sponsor must be
a UAE national with more than 51% ownership of the firm. Typically, a person would
engage into some sort of profit-sharing arrangement with the local profits and agree
on a sharing ratio that the parties would choose.
Choose the Form of Business Structure
When applying for company registration in Dubai, the applicant must choose the kind
of business structure that will be used. There are several benefits and drawbacks to
selecting the kind of business structure.
Documents Required for Dubai Company Registration
Because there are several types of enterprises in Dubai, each would require a unique
set of documentation. For business registration in Dubai, the following papers would
be required:
- Application form of the Business
- Bank Reference Letter for Each Shareholder
- Business Plan
- MOA and AOA which is duly notarised by the authority
- NOC from the Sponsor
- Passport of the Sponsor to prove that he/she is a UAE National
- Passports of the Managers of the Business
For an industry license apart from the above documents the following documents
have to be provided:
- Copy of the Feasibility Study
- Existing Company Profile
- Information related to the Investor
For Setting up Branch Offices
- Copy which is attested related to the Certificate of Incorporation, MOA and
AOA
- Board Resolution of the Company
- Three months bank statement related to the parent company
- Passport Copy and Original Power of Attorney
Why Choose Dhanguard?
Dhanguard will assist foreign investors in establishing a company in the UAE by using
a comprehensive strategy that will allow investors to focus on their primary
business operations while our PRO Agents manage the administrative requirements.
The establishment of a firm in the UAE The investor begins by picking three
tradenames for the newly founded firm. The name is subject to approval by the
relevant authorities (Dubai Economy/Free Zones). The investor then selects the
appropriate connected business activity and business licence type. In addition, the
appropriate business jurisdiction (Mainland/Free Zone/Offshore) for establishing the
firm must be determined.
Once the business jurisdiction has been established, hunt for suitable office space
and draught the rental agreement. To acquire their firm licence, the investor must
now submit the relevant documentation as well as the business licencing money. Apply
for a residency visa in the UAE and create a corporate bank account in the name of
the newly formed firm.
With Dhanguard Business Consultants assisting you throughout the whole business
formation procedure, you can sit back and relax knowing that our Expert PRO Agents
will handle all of the above responsibilities tirelessly. We guarantee that you will
have the most frictionless company formation in the UAE and that you will obtain all
company documentation in the shortest amount of time feasible in order to begin
commercial activities as soon as possible.
